When spouses need long-term care, understanding the effects of income on Medicaid eligibility can be confusing and challenging. Many families think they’ll have to spend their life savings, or that the healthy spouse will be left with nothing after working hard for years. Thankfully, the program offers protection—but following the rules requires clarity and care. Here are eight ways income may affect couples’ eligibility for Medicaid benefits.
Joint vs. Individual Income
Many couples wonder how does my spouse’s income affect our Medicaid? For the program’s purposes, income is attributable to the person applying for coverage. If the ailing spouse applies for Medicaid only their income is used to determine eligibility. There’s a limit on how much of their income is usable, and the healthy spouse may be able to receive a portion. This rule ensures that the other spouse isn’t left without financial support during tough times.
Income Limits Matter
Most states set income caps for married people applying for Medicaid. If an applicant makes more than the state’s limit, they may need a qualified income trust (QIT) to receive benefits. This powerful legal tool redirects income into a trust, which helps couples meet Medicaid eligibility requirements.
Protection of Spousal Income
A compassionate feature of Medicaid’s spousal rules is that the healthy spouse’s income isn’t used to determine the applicant’s eligibility. No matter how much the other spouse earns, their income is untouched—and it doesn’t keep applicants from getting the care they need. This protection ensures the non-applicant spouse maintains a minimum standard of living.
The MMMNA Bridges the Gap
If the Medicaid applicant is the breadwinner, the healthy spouse may receive part of their income. Known as the minimum monthly maintenance needs allowance or MMMNA, the amount varies depending on location. Simply put, if the healthy spouse’s income is below the minimum, Medicaid gives them a portion of the other spouse’s income to fill the gap.
Joint Assets and Income Might Count Against You
Income from jointly held assets, including savings accounts and rental properties, can be partially attributed to the applicant, with the division dependent on state policy and ownership structure. In many cases, states assume equal ownership until it’s proven otherwise. Couples should determine how their income streams and assets are held to avoid future Medicaid eligibility issues.
States’ Rules Vary Widely
Medicaid is jointly run by state and federal entities, meaning eligibility requirements vary by state. Some states follow the “categorically needy” method, with strict income limits, while others use a “medically needy” rule that allows applicants to use excess income to cover medical expenses. Understanding your state’s Medicaid policies is crucial, and seeking legal guidance is a wise choice.
Income Timing Matters
Medicaid considers applicants’ monthly income. If the ailing spouse’s income rises sharply, it may temporarily disqualify them. Planning with a legal advocate or a Medicaid specialist can prevent one-time increases from affecting eligibility. Strategic timing of income sources, such as delaying retirement withdrawals or spreading asset sales across multiple months, can help maintain qualification during the application process.
Planning Preserves Assets and Income
Income is only one part of the Medicaid picture, and spouses applying for benefits should seek legal and professional advice before starting. With preparation and planning, couples can protect their healthy spouse’s income, use legal tools to preserve eligibility and get the care they need. The earlier couples plan, the more options they’ll have.
